Political Uncertainties, GDP and Price Data, and Another Large Batch of PMI Survey Releases – Currency Thoughts
Political Uncertainties, GDP and Price Data, and Another Large Batch of PMI Survey Releases
September 3, 2025
Omnipresent political concerns keep chugging along. France and Japan face possible political leadership changes later this month. Tensions are rising between China and the United States. U.S. policies on tariffs, domestic military policing and deportations without due process are being challenged in the courts. Stagflationary news casts some doubt on coming central bank interest rate decisions.
In overnight financial market action, yesterday’s dollar rebound stalled. Although up 0.2% against the yen and 0.1% versus the Canadian dollar, the dollar also held steady relative to the Swiss franc and New Zealand dollar and fell 0.5% vis-a-vis the South Korean won, 0.2% against the Australian dollar and 0.1% versus the euro and sterling.
Tech stocks pared Tuesday losses, but the Russell 2000 and DOW did not share in that rebound in pre-open futures trading. In Pac Rim stock markets overnight, there were losses of 1.8% in Australia, 1.2% in China and 0.9% in Japan. European equities rebounded somewhat from Tuesday’s pounding.
Ten-year sovereign debt yields ticked a basis point higher in the United States and Japan but dropped two basis points in Germany and France and by four bps in Italy. Oil had traded above $65.5/bbl earlier today but now shows a net 2.2% drop. Prices for Bitcoin and gold have risen.
Led by consumer spending, Australian GDP grew 0.6% in the second quarter, twice the prior quarter’s pace, and that lifted on-year growth to 1.8%. The 1.6% first half growth from a year earlier was higher than calendar year growth in either 2023 or 2024.
South Korean GDP expanded 0.7% on quarter but just 0.6% between the second quarters of 2024 and 2025.
Turkish consumer price inflation eased to a 45-month low in August but, at 32.95%, is a continuing testament to the potential harm of political meddling in monetary policy. Turkish inflation last year peaked in May at 75.45%. Producer prices, which crested in 2022 at a hyperinflationary 157.7%, had a 6-month high reading in August of 25.16%.
In the former Soviet republic of Georgia, consumer price inflation rose to a 29-month high last month of 4.6%, having bottomed last November at 0.3%.
A 12.0% year-on-year rise of Kazakhstani consumer prices in August constituted a two-year high.
Producer prices in the euro area rose 0.4% in July, twice analyst forecasts but resulting in the smallest year-on-year increase (0.2%) in seven months.
Non-oil purchasing manager readings in August rose to two-month highs of 56.4 and 53.3 in Saudi Arabia and the United Arab Emirates but slid 0.3 points to a 2-month low of 49.2 in Egypt.
The manufacturing PMI indices in Vietnam of 50.4 and Singapore of 50.0 last month represent a 2-month low and a 2-month high, respectively. Hong Kong’s private PMI moved above the 50 neutral level to a 7-month high of 50.78.
Euroland’s composite PMI (embodying both manufacturing and service sector business conditions) got revised downward to 51.0, which the index’s compilers characterized as “painfully slow growth.” While the French reading of 49.8 was its highest in a year, the indices for Spain, Italy, Ireland and Germany were each lower than their scores in July. Euroland’s service sector PMI printed at 50.5 versus 51.0 in the previous month, eliciting the comment regarding its recent trend as being more like “stagflation than recovery”since the survey also highlighted an uptick in production costs.
The British composite and service sector PMIs were each revised upward to a one-year high of 53.5 and a 16-month high of 54.2, respectively.
Australian August composite and service PMI reading of 55.5 and 55.8 were at 40-month highs.
While Japan’s composite PMI reading ticked up to a 2-month high of 52.0, the services component slid to a 2-month low.
India’s composite and service sector PMIs were each revised lower but still exceeded 60 at 63.2 and 62.9, respectively, which represent their most elevated readings in 17 years and 188 months.
China’s composite PMI of 51.9 was at a 9-month high. The faster improvement partly reflected a 15-month services PMI high of 53.0.
Sweden’s composite and services PMI scores of 53.9 and 53.4 were each much above July readings of 50.3 and 49.0.
The South African manufacturing PMI slid to a 2-month low of 50.1, while Lebanon’s reading of 50.3 was at a half year high.
A 1.2% drop last week of mortgage applications in the United States was the third consecutive weekly decrease even though the 30-year fixed mortgage rate of 6.64% was its lowest since the initial week in April.
The Federal Reserve Beige Book, which documents regional activity and inflation trends since the last FOMC meeting gets published later today.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: composite and service sector PMIs in August 2025, Euroland producer prices, Turkish CPI and PPI
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